Question

Assertion (A): Premium received on issue of shares is credited to Securities Premium Account.

Reason (R): Securities Premium Account is shown under the main head 'Reserves and Surplus'.

In the context of above two statements, which of the below options is correct?

विकल्प

• Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation of Assertion (A).

• Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).

• Assertion (A) is false but Reason (R) is true.

• Both Assertion (A) and Reason (R) are false.

Answer 1

Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation of Assertion (A).

Explanation:

Premium received on issue of shares is credited to Securities Premium Account. Its presentation under Reserves and Surplus does not explain why the premium is credited to that account.